HK Banks Ready to Serve Web3 Customers amid Crypto Hub Push

With the deadline for changes to cryptocurrency regulations in Hong Kong (HK) rapidly approaching, an increasing number of companies and digital asset exchanges are seeking local licenses and setting up branches in the special administrative district. Meanwhile, banks operating in the area, including China-owned Bank of Communications, are vying for potential customers.

Hong Kong Banks Offer Accounts to Cryptocurrency Companies

In a move that will be crucial in supporting day-to-day operations for cryptocurrency businesses, banks in Hong Kong have started offering deposit accounts to these companies.

At a time when the United States is shutting down cryptocurrency-linked banks and tightening the regulatory screw on exchanges operating in the country, Hong Kong has decided to loosen its crypto bans and is beginning to build a digital asset hub in this part of the world in early June.

The Wall Street Journal has reported that ZA Bank, a virtual bank operating in HK, and China-owned Bank of Communications are among those seeking to provide fiat currency deposit and withdrawal services to licensed cryptocurrency companies. The money belonging to exchanges and their customers will be held in segregated accounts.

As many as 80 companies are queuing up to join the local industry and the web3 ecosystem, according to news reports in March, which confirmed a change in cryptocurrency regulations on the operations of digital asset companies and their provision of services to retail customers.

"As of end-February 2023, Invest Hong Kong has received expressions of interest from over 80 virtual asset-related Mainland and foreign companies in establishing their presence in Hong Kong," Christian Hui, the Secretary for Financial Services and the Treasury in Hong Kong, then-commented.

More Companies Obtain Crypto Licenses in Hong Kong

As Hong Kong opened a consultation in February regarding the possibility of allowing retail traders to trade cryptocurrencies, major exchanges quickly announced their intentions to either return to the local market or launch on it for the first time.

"As has been our philosophy since 2018, our proposed requirements for virtual asset trading platforms include robust measures to protect investors, following the 'same business, same risks, same rules' principle," Julia Leung, the Chief Executive Officer at SFC, said.

Among the early adopters were Huobi and Gate.io, which revealed their plans shortly after the public consultation was released. A month later, OKX joined the fray, announcing the launch of a branch in Hong Kong to apply for a virtual asset service provider (VASP) license under the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022.

In April, Gate.io confirmed its application for a digital assets license and introduced Gate Wealth, a new wealth management solution aimed at assisting crypto investors worldwide in managing their digital assets effectively.

One week prior to the announcement in February by the HK financial markets regulator, Interactive Brokers, a top electronic trading platform in the US, made the decision to extend its crypto services to Asian markets by launching new digital asset trading services in Hong Kong. At present, the platform only offers two assets, Bitcoin and Ethereum, but Interactive Brokers has not excluded the possibility of adding more tokens to its offerings in the near future.